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UP posts strong Q1 results

MAJOR US rail shipper Union Pacific reported record results for the first quarter of 2012, with earnings gaining 35% on the back of higher shipping rates and fuel surcharges.

Lauren Barrett
UP posts strong Q1 results

First-quarter net income from January to February tipped in at $863 million, up from $639 million in the previous corresponding period.

The news comes as a major boost for the company, after its coal business faces tough times with its coal shipments down 8% in the first quarter.

However, with coal representing about one-fifth of UP’s business, the positive first-quarter results were buoyed by its other business areas.

Its automotive industry was up 26% and its industrial products sector was up 25%, while its energy business was up 5%.

Operating revenues for the quarter came in at $5.1 billion, up 14%.

The company said this quarterly result was its best ever.

“Union Pacific achieved record financial results across the board this quarter,” chief executive officer Jack Koraleski said.

UP’s coal sector got off to a tough start for the year, with the company recently conceding it loaded 842 coal trains in the Southern Powder River Basin last month, down from 1044 trains in 2011.

Shipments from UP’s other main service area, the Colorado/Utah region, were also on the decline.

Koraleski said the company was realising the benefits of its diversified franchise, despite current coal challenges brought about by a mild US winter.

“Although softer coal demand remains a challenge, the benefits of our diverse franchise should support continued opportunities in other markets, driving record financial results for the year,” he said.

“With a strong first quarter behind us, we're focused on the prospects that lie ahead.”

UP’s operation area encompasses 23 states in the western two-thirds of the US.

UP’s quarterly results bear a striking resemblance to fellow coal shipper CSX, which also posted record first-quarter results despite domestic coal carloads dropping to an 18-year nationwide low.

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